Wealthy people are leaving California resulting in California’s population decline for three consecutive years.
California’s population decline has been happening for three consecutive years. (Photo: Redfin)
California’s Population Decline
Between July 2021 and July 2022, around 343,000 people left California, marking the third consecutive year of California’s population decline in the state. California’s population decline is usually due to departing residents who are wealthier individuals.
California’s population decline poses a threat to California’s finances as the state lost about $343 million in tax revenue in 2021 due to out-migration. A study from MyEListing.com suggests that high personal income tax rates in California deter high-wealth individuals from staying hence California’s population decline.
Furthermore, aside from California’s population decline, the Californians Finance Department projects stated that the state’s population will remain stagnant at 39 million for the next few decades, rather than growing to 53 million by 2050 as previously expected. The example of Los Angeles Lakers player Anthony Davis, who will pay $27 million in income taxes compared to the $24 million he will actually take home after all other taxes, highlights how athletes, and others, might be motivated to live in states with no income tax such as Florida or Texas which may also be a factor of California’s population decline.
According to a published article by Reason, the ability to work from anywhere and the rising cost of living are additional factors driving individuals to actively choose where to live and work and these factors may be what’s causing California’s population decline.
States need to adjust to this reality or risk facing the consequences of discouraging prosperity to also not experience California’s population decline.
The California Franchise Tax Board’s Announcement
In a published article by the Franchise Tax Board, most Californians have until November 16, 2023, to file and pay their tax year 2022 taxes without penalties. Taxpayers affected by a disaster can claim a deduction for a disaster loss and can do so on their 2022 return for a quicker refund.
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